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Sunteck Lifestyles Limited v (1) Al Tamimi And Company Limited (2) Grand Valley General Trading Llc [2017] DIFC CFI 048

Sunteck Lifestyles Limited v (1) Al Tamimi And Company Limited (2) Grand Valley General Trading Llc [2017] DIFC CFI 048

November 23, 2017

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Claim No: CFI 048/2017

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

 

IN THE COURT OF FIRST INSTANCE

BEFORE JUSTICE SIR JEREMY COOKE

BETWEEN

 

SUNTECK LIFESTYLES LIMITED

Claimant

and

 

(1) AL TAMIMI AND COMPANY LIMITED

(2) GRAND VALLEY GENERAL TRADING LLC

                                                                                                Defendants

 

Hearing:            7 November 2017

Counsel:          Rupert Reed QC instructed by Clyde & Co for the Claimants

Peter Smith (Al Tamimi & Company) for the First Defendant

Philip Punwar (Baker Botts LLP) for the Second Defendant

 Judgment:        15 November 2017

 


JUDGMENT OF JUSTICE SIR JEREMY COOKE


 

Summary of Judgment

On 21 October 2017 Sir Jeremy Cooke granted the Claimant an ex parte injunction against the two Defendants, preventing them from releasing documents held by the First Defendant pursuant to the terms of an escrow agreement made between the Claimant and the Second Defendant on 28 June 2015 (the “Escrow Agreement”). The Escrow Agreement was concluded pursuant to an Addendum to a Joint Venture Agreement (the “JVA”).

The injunction was granted on the basis that the First Defendant, a DIFC registered entity was party to the Escrow Agreement and held the documents in question. The Second Defendant, filed a skeleton which challenged the jurisdiction of the Court to grant the injunction on the basis that the parties to the Escrow Agreement had agreed to the jurisdiction of the onshore Dubai Court.

The Court was required to determine the question of jurisdiction in order to decide whether or not the injunction should be continued or discharged.

Sir Jeremy found that the DIFC Courts do have jurisdiction on the following grounds. The relevant clause of the Escrow Agreement was not, on its face, an exclusive jurisdiction clause as it referred to the “courts of the Emirate of Dubai,” however, this was not of great significance as DIFC case law in National Bonds Corporation PJSC v Taalem [2011] DIFC CA 001, Corinth Pipeworks SA v Barclays Bank plc  [2011] DIFC CA 002 and Injazat v DWS [2010] DIFC CFI 019 had held that, where the form of words used referred simply to the courts of Dubai or equivalent terminology, those words could apply to both the courts of DIFC and onshore Dubai and the critical question  was which court was given jurisdiction, which had to be decided on the basis of the context, including not only the contract itself but the surrounding circumstances.

When regard was paid to the terms of the Escrow Agreement logic dictated that the Al Tamimi entity referred to must be the DIFC entity. The reason for that was that the notice provisions in Clause 6.1 specifically required that any notice given to the Escrow Agent was to be given to Al Tamimi & Company’s office in the DIFC.

Moreover, if it was the DIFC Al Tamimi entity which was party to the Escrow Agreement, the overwhelming inference, when construing the words “the courts of Dubai” was that they must refer to the DIFC Courts which exercise direct jurisdiction over the DIFC entity as the Escrow Agent. The fact that the Escrow Agreement was in the English language alone was a pointer to this because, although the English language is widely used in Dubai, it is not the language used in the courts of onshore Dubai. More importantly, all the exchanges of correspondence on the relevant subject from both the Claimant and the Second Defendant were addressed to the Head of Banking & Finance at Al Tamimi & Company at either the DIFC address or PO Box 9275 to which reference was made in the Escrow Agreement and which constitutes the post office box of the DIFC entity (as well as the onshore Dubai entity). As the parties intended the documents to be held in escrow by the Al Tamimi DIFC limited company in the DIFC, this made the DIFC Courts the logical choice as the courts which should determine the parties’ rights under the Escrow Agreement, whatever the governing law of the JVA.

Furthermore, if regard was had to the JVA provisions relating to law and jurisdiction, the choice of law clause should be read in the light of the parties’ choice of Singapore (a common law jurisdiction) as the seat of arbitration and their choice of the Rules of the LCIA as governing that arbitration. Despite the JVA parties’ lack of connection to the DIFC, DIFC law would represent the system of law with a closer connection to the jurisdiction and curial rules chosen for the arbitration. With wording which could encompass the law of either legal system in Dubai, DIFC law would be a more logical choice than the law of onshore Dubai, given the parties choice of seat, consequent supervisory court and arbitration rules.

If the purpose of the amended Judicial Authority Law from which the DIFC Courts derived their jurisdiction had been to allocate all cases with Dubai choice of law agreements to the onshore courts unless the relevant agreement included the actual words “the courts of the DIFC”, the “courts of the Dubai International Financial Centre” or “DIFC” in some form, that is what the provision would have said. What was required was simply an agreement which is specific enough and sufficiently clearly expressed to amount to a choice of the DIFC Courts.  It was clear in this context that the words were specific in identifying the DIFC Courts and in the overall circumstances that was what the parties intended, the provisions in question were therefore “specific, clear and express.”

This summary is not part of the Judgment and should not be cited as such

ORDER

UPON hearing Counsel for the Claimant and Counsel for the Defendants on 7 November 2017

AND UPON reviewing the material filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

  1. The DIFC Courts have jurisdiction over both the First and Second Defendants in this action.
  2. The injunction against the two Defendants, preventing them from releasing documents held by the First Defendant pursuant to the terms of an escrow agreement made between the Claimant and the Defendants on 28 June 2015 shall remain in place.
  3. The Second Defendant’s allegations of material nondisclosure on the part of the Claimant are dismissed.
  4. Costs to follow the event as between the Claimant and the Second Defendant on the standard basis, to be assessed by the Registrar if not agreed.

 

Issued by:

Lema Hatim

Assistant Registrar

Date of Issue: 16 November 2017

At: 2pm

 

JUDGMENT

Introduction

  1. On Saturday 21 October 2017 I granted the Claimant an ex parte injunction against the two Defendants, preventing them from releasing documents held by the First Defendant pursuant to the terms of an escrow agreement made between the Claimant and the Second Defendant on 28 June 2015 (the “Escrow Agreement”). Whether or not the First Defendant was party to that agreement emerged as an issue at the hearing, though not previously signalled in the Second Defendant’s skeleton argument. The point was not taken by the First Defendant. The return date for an inter partes hearing was specified as 24 October 2017 but by agreement between the parties, that was adjourned to 7 November 2017.
  2. The injunction was granted on the basis that the First Defendant, a DIFC registered entity was party to the Escrow Agreement and held the documents in question. The Court was informed by the Claimant that there was an on-shore Dubai entity with the name of Al Tamimi and Company, but no details were given of the legal personality of either the Al Tamimi entity or of their interconnection. Mr Smith, who appeared for the First Defendant on the return date and otherwise did not address the Court apart from providing one other piece of information, informed the Court that Al Tamimi and Company is a civil partnership in onshore Dubai, located at the Maze Tower whereas Al Tamimi and Company Ltd is a limited company registered in the DIFC. It is clear from the letterhead of the latter, where the words “Al Tamimi & Co.” appear at the top, that the differentiation between the two is not the subject of any emphasis, although the full name of the limited company appears at the foot of the page, with the description “Advocates & Legal Consultants” with an address in the DIFC and a further post box address of “PO Box 9275, Dubai, UAE”. This latter post box address is shared with the Dubai entity. The eponymous founder of these two entities is Essam Al Tamimi and the business is well known for the practice of law in the UAE and elsewhere in the Middle East. The Head Office of the whole organisation, is, I was told, in the DIFC.
  3. No application was made to discharge or vary the injunction and no evidence was filed by either defendant in circumstances where, on 31 October 2017, I had given directions that any evidence to be relied on by the Defendants was to be filed by no later than 4pm on Wednesday 1 November and any evidence in reply no later than 4pm on Saturday 4 November. I ordered that skeleton arguments should be filed by 4pm on 5 November 2017. The First Defendant adopted a policy of neutrality and filed no skeleton argument. The Second Defendant, which was represented at the hearing by Mr Philip Punwar, filed a skeleton which challenged the jurisdiction of the Court to grant the injunction on the basis that the parties to the Escrow Agreement had agreed to the jurisdiction of the onshore Dubai Court. No challenge was raised to the grant of the injunction on any other basis, although during the hearing, the Second Defendant accused the Claimant of a failure to make full and frank disclosure to the Court at the ex parte hearing of the true position of the two Al Tamimi entities and the potential defence that it was the onshore Dubai entity which was party to the Escrow Agreement.
  4. It is well-established that, if allegations of nondisclosure are to be made, they must be detailed in advance of the hearing so that the points can be properly addressed at the hearing. I did not consider that there was any force to the points in any event, but, had I so considered, the only just course would have been to allow the Claimant time to consider what was said and file any evidence needed by way of explanation, before making submissions on the points raised. Similarly, whatever the past practice has been, in my judgment, where jurisdiction issues are to be raised, these should be spelt out in an application contesting jurisdiction and not merely included in a skeleton shortly before the return date. In this case, after service of the injunction and accompanying documents on 22 October, with the adjournment of the return date to 7 November, the Defendants had ample time to decide what points they wished to raise and to issue any appropriate application. It is said that an acknowledgement of service was filed in which the intention to contest the jurisdiction was set out, but this was never served upon the Claimant and the Court appears to have no record of it either.
  5. Be that as it may, it is necessary for the Court to determine the question of jurisdiction in order to decide whether or not the injunction should be continued or discharged, and the Claimant was able to address the issues despite the limited time available after notification of the point. Whilst there was complaint at this course of conduct, the more vociferous complaint was voiced by the Second Defendant at the authorities relied on by the Claimant in response on the night before the hearing. Those authorities are well known but are largely concerned with the position under the unamended Judicial Authority Law No. 12 of 2004 (the “JAL”) rather than the amended version which came into effect on 31 October 2011. Thus, the decisions of the higher courts in DIFC were concerned with Article 5(A)(2) of the old law which provided that “parties may agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of this Article.” They thus were concerned with the “opt out” provision from the mandatory exclusive jurisdiction set out in Article 5(A)(1). Article 5 is now framed somewhat differently with an “opt in” provision in Article 5(2) and a saving of jurisdiction where parties have opted out under Article 5(3) but the other court selected by the parties has dismissed the claim for lack of jurisdiction.
  6. Beyond the question of jurisdiction there is nothing for this Court to decide since it is clear and unchallenged that the Claimant has a good strong bona fide case and that the balance of convenience lies in holding the ring and the status quo and preventing the release of the documents held in escrow.

The Issue of Jurisdiction

  1. Article 5 of the amended JAL provides as follows:

“Jurisdiction

  • the Court of First Instance:
  • the Court of First Instance shall have exclusive jurisdiction to hear and determine:
    1. civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;
    2. civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;
    3. civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;
  • the Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.
  • The Court of First Instance may hear and determine any civil or commercial claims or actions falling within its jurisdiction if the parties agree in writing to submit to the jurisdiction of another court over the claim or action but such court dismisses such claim or action for lack of jurisdiction”.
  1. Article 13 of DIFC Law No.10 of 2005 provides that “a submission to the courts of a jurisdiction in a contract shall be effective”, which tallies with the provisions of Article 5(A)(3) of the amended JAL. Thus, it is open to the parties to agree to the jurisdiction of a foreign court or the onshore courts of Dubai and the DIFC Courts will recognise that choice unless there are reasons in law why effect cannot be given to that choice.
  2. As in many of the cases concerning the opt out provisions of the unamended JAL, the essential issue between the parties concerned a law/ jurisdiction clause which could be read as referring either to the courts of onshore Dubai or the courts of the DIFC. Clause 11 of the Escrow Agreement read as follows: –

“This agreement shall be governed and construed in accordance with the law of United Arab Emirates as applied by the courts of the Emirate of Dubai. The Parties hereto irrevocably consent to the jurisdiction of the courts of Dubai for the resolution of disputes with respect to this agreement and agree to comply with all the requirements necessary to give such court jurisdiction.”

  1. This is not, on its face, an exclusive jurisdiction clause but for present purposes that does not appear to me to be of significance. Because the courts of the DIFC and onshore Dubai operate in the same country, the parties must be taken to have chosen one system or another and, by so doing, conferred jurisdiction on that system in contradistinction to the other. If the words are to be taken as a choice of the jurisdiction of the onshore Dubai Courts, under the terms of Article 13 of DIFC Law No. 10 of 2005 (and Article 5(A)(3) of the amended JAL), effect should be given to that choice, notwithstanding the existence of jurisdiction under Article 5(A)(1) of the amended JAL, even if the injunction granted by the onshore courts is only capable of enforcement indirectly in the DIFC by recognition in the DIFC Courts.
  2. The prior authorities in relation to the unamended JAL established that the burden lay on the party contending for an opt out from the mandatory jurisdiction in Article 5(A)(1) to show that the parties intended to confer jurisdiction in respect of the dispute in question on a court other than the DIFC Courts. The test to be applied requires the Court to ascertain the ordinary and natural meaning of the words of the jurisdiction agreement as they would have been mutually understood by the parties, having regard to the background circumstances, the nature of the agreement and the context in which the words were used. I need not refer in any detail to the decisions in National Bonds Corporation PJSC v Taalem [2011] DIFC CA 001, Corinth Pipeworks SA v Barclays Bank plc [2011] DIFC CA 002 and Injazat v DWS [2010] DIFC CFI 019 which show that, where the form of words used refers simply to the courts of Dubai or equivalent terminology, those words are apt to apply to both the courts of DIFC and onshore Dubai and the critical question therefore has to be decided on the basis of the context in which those words appear, including not only the contract itself but the surrounding circumstances. The Second Defendant accepts that there is no basis for holding that the phrase “courts of Dubai” means the Dubai Courts rather than the DIFC Courts and that the Court must search for the particular meaning of the words within the range of their natural and ordinary meaning, which having regard to the material circumstances of the case, most closely reflects the mutual intention of the parties.
  3. The Escrow Agreement is dated 28 June 2015 and was concluded pursuant to an Addendum dated 3 March 2015 to a Joint Venture Agreement dated 27 April 2014 (the “JVA”). The terms of the addendum superseded the JVA and by Clause 4 thereof, it was agreed that the Claimant should hand over the relevant documents in escrow to “Al Tamimi & Company, Advocates and Legal Consultants, 15th Floor, the Maze Tower, PO Box 9275, Dubai, United Arab Emirates as appointed Escrow Agent”. The JVA at clause 36.1 and 42 provided that it was to be governed by the applicable federal laws of the United Arab Emirates and the laws applicable in the Emirate of Dubai. It further provided for disputes to be resolved in arbitration in accordance with the London Court of International Arbitration Rules in force and, unless otherwise agreed, the seat of Arbitration to be Singapore. None of the parties to the JVA or the addendum were resident or registered in the DIFC but the Second Defendant and a related company and majority shareholder who were also parties to the JVA were resident in onshore Dubai. It was submitted by the Second Defendant that the Escrow Agreement supports the object and purpose of the JVA and should be viewed as an integral part of it but the connection between the Escrow Agreement and the Addendum is much weaker than that between the escrow agreement which was originally Schedule 2 to the JVA and the JVA itself. The nature of the Escrow Agreement in issue is very different to the original escrow agreement which related to specific obligations in the JVA and the description of the Al Tamimi entity in the Escrow Agreement differs from that in the Addendum.
  4. The Second Defendant relies upon the following factors: –
    • The improbability that the Escrow Agreement should be governed by a different governing law to that of the JVA.
    • The probability that, if the intention of the parties was for the governing law of the Escrow Agreement to be that of the DIFC, the Claimant and a law firm in the position of Al Tamimi would have so provided in express terms.
    • The Escrow Agreement was not signed in the DIFC.
    • The lack of evidence that at the time the Escrow Agreement was executed, the parties to the JVA chose Al Tamimi to be the Escrow Agent because it had an office in the DIFC.
    • The JVA referred to “M/S Al Tamimi & Company, Dubai” whilst the Escrow Agreement identified Al Tamimi & Company by reference to its shared PO box number.
    • The registered office of the Joint Venture company was c/o Al Tamimi & Company at the Maze Tower in onshore Dubai.
    • The common knowledge and the particular knowledge of the Claimant that Al Tamimi & Co is the largest regional law firm with offices across the UAE, including onshore Dubai, with its worldwide head office in the DIFC which represents non-DIFC parties in a wide range of matters with no connection to the DIFC.
    • The lack of any stipulation in the Escrow Agreement that the Escrow Agent must receive or hold anything in the DIFC or take any steps in the DIFC.
    • The deposited shares under the Escrow Agreement are not shares in a DIFC company.
    • The terms of a letter addressed to the holders of a Power of Attorney which was deposited under the Escrow Agreement which, it was wrongly maintained, was addressed to the Escrow Agent.
    • The terms of letters written by the Claimant’s corporate lawyers to “Al Tamimi & Company” in the DIFC referring to the need for adherence to the Dubai Legal Affairs Department Code of Ethics and Conduct for Legal Practitioners. As this code applies to lawyers in both onshore Dubai and the DIFC, this likewise does not advance the Second Defendant’s case.
  5. Many of these factors are either neutral or depend upon the findings of the Court relating to the JVA and the significance or otherwise of the degree of connection of the Escrow Agreement with the JVA and its Addendum. When attention is focused on the Escrow Agreement itself, these factors tend to recede into the background, if they represent pointers at all.
  6. A key issue which separated the parties was the identification of the Al Tamimi entity which was party to the Escrow Agreement. In the Second Defendant’s submission, the Dubai entity of Al Tamimi & Company was the party, whereas the Claimant maintained that it was the DIFC limited company, Al Tamimi & Company Ltd, which was party. The oddity about this differentiation is that, on Mr Punwar’s arguments, the First Defendant against whom the injunction was granted, has no contractual nexus with the Claimant and no jurisdiction agreement at all. In those circumstances, regardless of the position of the Second Defendant, the terms of Article 5(A)(1) would apply to give the Court jurisdiction under paragraph (a) – a “civil or commercial claim and action to which…any DIFC Establishment or Licensed DIFC Establishment placement is a party” and under paragraph (c) – a “civil or commercial claim and action arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities”. It is common ground that the First Defendant is a DIFC body and that the documents are currently being held by Al Tamimi and Company Ltd in DIFC. It is furthermore arguable that subparagraph (b) would apply since the claim would be a civil or commercial claim or action relating to a contract which was to be performed or was supposed to be performed within DIFC pursuant to implied terms stipulated in the contract”. On the Second Defendant’s own primary case therefore, as it emerged at the hearing, the jurisdiction of the DIFC was established vis a vis the First Defendant, as a third party to the Escrow Agreement, regardless of the proper construction of Clause 11. If the Claimant and the Second Defendant had agreed to the jurisdiction of the onshore Dubai courts, then an injunction could be issued against the First Defendant in the DIFC Courts, pending the determination of the underlying substantive dispute between the other parties in the onshore courts.
  7. When regard is paid to the terms of the Escrow Agreement however logic dictates that the Al Tamimi entity referred to as “Al Tamimi & Company of PO Box 9275 Dubai, United Arab Emirates” and as “the Escrow Agent” must be the DIFC entity. The reason for that is that, although the PO Box number covers both the DIFC and onshore Dubai Al Tamimi entities, the notice provisions in Clause 6.1 specifically require that any notice given to the Escrow Agent is to be given to “Al Tamimi & Company, 6th floor, Building 4 East, Gate Precinct, Dubai International Financial Centre PO Box 9275 Dubai, United Arab Emirates”. It is self-evident, notwithstanding argument to the contrary, that the “Al Tamimi & Company” referred to in the recital as the party to the Escrow Agreement with the PO Box address is the same entity as that set out in the notice provisions. It is nothing to the point that the notice provision allows for a change to be made in the details of the party to be notified or that it is possible for a party to nominate an agent to receive notice. The obvious conclusion is that it is one and the same entity which is referred to, namely the DIFC limited company with the DIFC address given.  The parties intended the Escrow Agent to be the DIFC limited company and for the documents to be held there, so that any notice had to be given to that entity. This is reinforced by the additional words stating that the notice is to be addressed “for the attention of Head of Banking and Finance, UAE, which at all material times was Mr Jody Waugh, a New Zealand qualified lawyer in the DIFC office of Al Tamimi & Company Ltd. It is not significant that the word “Ltd” does not appear in the Escrow Agreement because of the manner in which the DIFC entity is commonly referred to, as set out in its letter heading, as referred to above (Al Tamimi & Co).
  8. If it is the DIFC Al Tamimi entity which is party to the Escrow Agreement, the overwhelming inference, when construing the words “the courts of Dubai” is that they must refer to the DIFC Courts which exercise direct jurisdiction over the DIFC entity as the Escrow Agent. The fact that the Escrow Agreement is in the English language alone is a pointer to this because, although the English language is widely used in Dubai, it is not the language used in the courts of onshore Dubai. More importantly, it is, to my mind clear, that this is what the parties anticipated because all the exchanges of correspondence on the relevant subject from both the Claimant and the Second Defendant were addressed to the Head of Banking & Finance, Mr Jody Waugh at Al Tamimi & Company at either the Gate Precinct address in the DIFC or PO Box 9275 to which reference was made in the Escrow Agreement and which constitutes the post office box of the DIFC entity (as well as the onshore Dubai entity). The parties intended the documents to be held in escrow by the Al Tamimi DIFC limited company in the DIFC which makes the DIFC Courts the logical choice as the courts which should determine the parties’ rights under the Escrow Agreement, whatever the governing law of the JVA.
  9. I need not dwell upon each of the relevant pieces of correspondence but refer to the letters of 25 December 2016 from the Second Defendant, the letter of 29 December 2016 from the Claimant’s corporate lawyers, the email of 11 January 2017 from Mr Waugh at the DIFC address, the letter of 8 October 2017 from the Second Defendant, the response from Mr Waugh of 10 October 2017, the letters of 11 and 15 October 2017 from the Claimant’s corporate lawyers, the letters of 16 October from Mr Waugh and the Claimant’s corporate lawyers, the letters of 17 and 18 October from the Claimant’s corporate lawyers, the letter of 19 October from the Second Defendant and the ensuing correspondence leading up to the application for the injunction.
  10. In particular, the letter of 19 October 2017 from the Second Defendant, addressed to Mr Waugh at the Gate Precinct address in DIFC, illustrates the close connection with DIFC because of the presence of the documents in the Al Tamimi DIFC office: – “it being established that the conditions for the release of escrow documents has been established and the seven days period stipulated in Clause 4.3(a) of the escrow agreement expired, we will proceed with immediate arrangements for collection of escrow documents. We should be grateful for your cooperation in this regard.” What was plainly envisaged by the Second Defendant, when writing to Mr Waugh in the DIFC in these terms, was fulfilment by the Escrow Agent of its obligations by handing over the escrow documents for collection at the Escrow Agents’ offices in DIFC. Although I was told on instructions by Mr Smith for the First Defendant that the documents had moved from the Maze Tower address in onshore Dubai to the DIFC address on 14 September 2017 when a safe was moved, the only sensible rationale for that movement was the recognition that that is where the documents ought to have been throughout the relevant period, in the light of the notice provisions in the Escrow Agreement which must be taken as identifying the Escrow Agent as the Al Tamimi limited company in DIFC.
  11. Furthermore, if regard is had to the JVA provisions relating to law and jurisdiction, the choice of law clause should be read in the light of the parties’ choice of Singapore (a common law jurisdiction) as the seat of arbitration and their choice of the Rules of the LCIA as governing that arbitration. Despite the JVA parties’ lack of connection to the DIFC, DIFC law would represent a system of law with a closer connection to the jurisdiction and curial rules chosen for the arbitration. With wording which could encompass the law of either legal system in Dubai, DIFC law would be a more logical choice than the law of onshore Dubai, given the parties choice of seat, consequent supervisory court and arbitration rules.
  12. In these circumstances, the features relied on by the Second Defendant, where they can be said to point towards one jurisdiction rather than another, as opposed to being, in the main, neutral, carry little weight as compared with the considerations set out above.
  13. The focal point of the Second Defendant’s submissions in relation to the jurisdiction agreement, despite the primary contention that there was no operative escrow agreement between the First Defendant and the Claimant, turned on the wording of Article 5(A)(2) which gave jurisdiction to the DIFC Court in a civil or commercial claim “where the parties agree in writing to file such a claim with it…provided that such agreement is made pursuant to specific, clear and express provisions”. Although that wording is odd in stating the requirement that “such agreement is made pursuant to specific, clear and express provisions” (emphasis added), rather than stating that the agreement to such jurisdiction must be specific clear and express, that must be the effect of the words used. The Second Defendant contended that the use of the words “specific, clear and express” meant that the provision in question was one which the Court did not need to construe at all. It was submitted that Practice Direction No. 1 of 2015, published some four months prior to the Escrow Agreement, encapsulated the provisions required by the amended JAL for this purpose. He submitted that there had to be an express reference to “the DIFC Courts” as such or equivalent words. What the Practice Direction does, however, is to inform lawyers and parties of that which will be accepted by the DIFC Registry for the purpose of invoking the jurisdiction of the DIFC Courts, without prejudice to any challenges that might be made. The practice direction thus makes it clear that claim forms, which refer to jurisdiction agreements which use the words “the DIFC Courts”, will be recognised as prima facie according jurisdiction to the Court for the purpose of the issue of proceedings. The practice direction says nothing about other forms of words at all, nor their effect.
  14. Reliance was placed on three decisions of the Small Claims Tribunal where, in two cases, it was decided that, as the claims concerned real property, an opt in clause was ineffective, regardless of its terms (in one case with general words). In the third case, there was no indication that the parties had opted into the jurisdiction of the DIFC Courts at all although there is reference to an agreement with a general jurisdiction clause which did not name the DIFC Courts (Harold Pjsc v Hava [2017] DIFC SCT 127). I do not consider that these decisions advance the position and I am left to determine what is meant by “specific, clear and express provisions”.
  15. At the end of the day, it would be nonsensical to conclude that the parties had agreed to the jurisdiction of the DIFC Courts, as opposed to the onshore courts but that the words were not sufficiently “specific, clear or express” to amount to an agreement for the purposes of Article 5(A)(2) of the amended JAL, with the result that the matter would have to be determined in the onshore courts. If the purpose of the amended JAL had been to allocate all cases with Dubai choice of law agreements to the onshore courts unless the relevant agreement included the actual words “the courts of the DIFC”, “the courts of the Dubai International Financial Centre” or “DIFC” in some form, that is what the provision would have said. What it is looking for is an agreement which is specific enough and sufficiently clearly expressed to amount to a choice of the DIFC Courts. Whilst, in an ideal world, the use of wording such as that set out in the Practice Direction would be employed, the Courts do not live in an ideal world and have to construe the contracts in issue to determine the parties’ chosen jurisdiction when faced with clauses such as those found here. Once the clause has been construed the Court reaches its conclusion which in itself means that the words used are specific enough, clear enough and express enough for that conclusion to be reached. When general words such as those used here are first seen, they do not appear to be “specific, clear and express” as a choice of either the DIFC Courts or the onshore Dubai Courts. It is only when the process of analysis is undertaken that the true meaning is ascertained. If the parties have agreed to the jurisdiction of the DIFC Courts, on the proper construction of a jurisdiction clause, the agreement is, ex hypothesi, sufficiently specific, clear and express. The words used are given a meaning so that the provision is express. In the context, the words are specific in identifying the DIFC Courts and in the overall circumstances it is clear that this is what the parties intended. The provisions are therefore “specific, clear and express”.

Conclusion

  1. It follows from the above that this Court has jurisdiction over both the First and Second Defendants in this action and the injunction must therefore remain in being. Jurisdiction exists pursuant to Article 5(A)(1) and (2), for the reasons given, in respect of both defendants.
  2. The parties have apparently agreed on the form of the order, as it should be, in order to cover the specific documents held, and the order will therefore take the form of the draft which appears at Tab 3 of Bundle 2, unless objection is raised within one working day of publication of this judgment.
  3. Having read the relevant parts of the transcript of the ex parte hearing and having re-examined the affidavit of Mr Sheregar, I do not consider that there is any basis at all for a suggestion of material nondisclosure on the part of the Claimant in making the ex parte Reference was made to the onshore and DIFC entities which constitute the Al Tamimi business. The details were unsurprisingly not known to the Claimant, as they appear not to have been known to the Second Defendant.
  4. Criticisms were made of the timing of the Claimant’s application and the lack of any real opportunity for the First Defendant to respond to a request for an undertaking not to release the documents held in escrow, but the reality was that the Claimant had little option but to come to the Court on an ex parte On 17 October 2017, Al Tamimi expressed its view that it had “not been provided with any evidence that clause 4.1 (a) or (b) have been fully or partially performed” and that “the 7-day period stipulated in clause 4.3(a) has expired and Sunteck has not satisfied the conditions set out in that clause”. At a meeting on 19 October 2017 between the Claimant and Mr Waugh, the latter indicated that he was prepared to consider such other evidence as the Claimant might provide in relation to the performance of the JVA but it was on the same date that the Second Defendant wrote its letter, referred to above seeking to collect the escrow documents. Although the request for an undertaking was made on Friday, 20 October 2017, a nonworking day in Dubai, there was the possibility of the documents being released at any time and the urgency of the situation justified the urgent application made to me on Saturday afternoon (Dubai time) 21 October 2017.
  5. I have heard no argument about costs but, as between the Claimant and the Second Defendant, it appears to me that costs should follow the event and that the Claimant should recover costs on the standard basis, to be the subject of assessment by the Registrar if not agreed. I reach no final conclusion on this but intimate my preliminary thinking. I say nothing as to the position of the First Defendant, whose presence at the hearing was unsurprising but not required. If the parties are able to reach agreement on the costs position so much the better, but if not, a short email from each party setting out its submissions on the subject within 2 working days of the publication to the parties of this judgment would probably be enough for me to determine the issues, and if necessary I can and will ask for further submissions.

 

Issued by:

Lema Hatim

Assistant Registrar

Date of Issue: 16 November 2017

At: 2pm

 

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